RBI Overhauls Account Rules: Big Relief for UAE-Based NRIs; Check Details

The Reserve Bank of India has overhauled rules for current, overdraft, and cash credit accounts, significantly benefiting NRIs. More banks can now operate current and overdraft accounts for large borrowers, increasing flexibility.

The Reserve Bank of India (RBI) has introduced a series of major changes to how banks manage current accounts, overdraft (OD) facilities and cash credit (CC) accounts. These updates aim to remove day-to-day hurdles faced by borrowers, improve cash flow, and simplify account operations, a welcome move for thousands of UAE-based NRIs who handle businesses or financial commitments back home.

Why the Changes Matter for NRIs Abroad

For many Indian expats in the UAE, managing finances in India often involves coordinating with multiple banks, lenders and accounts. The old rules created bottlenecks, from delayed fund transfers to restrictions on who could operate key accounts. The updated framework brings more flexibility and fewer operational roadblocks.

More Banks Can Now Operate Current & OD Accounts

Earlier, borrowers with exposure of Rs 10 crore or more could maintain current or overdraft accounts only with a limited set of banks, causing inconvenience for companies dealing with multiple lenders.

RBI has now eased this rule:

• Any bank with over 10% exposure to the borrower can operate a current or OD account.
• If no bank crosses the 10% mark, the top two lenders can manage the account.

What this means for UAE NRIs:

Smoother coordination, quicker payments and fewer delays when managing credit lines or business operations in India.

Cash Credit (CC) Becomes Simpler

Cash credit accounts are lifelines for businesses, especially for working capital needs. Banks argued that RBI's earlier restrictions made CC difficult to use, since it functions differently from current accounts.

RBI listened and removed all restrictions on cash credit accounts.

For business owners abroad:

Vendor payments, day-to-day working capital and cash-flow management will now be easier and less restrictive.

Faster Access to Money: Two-Day Transfer Rule Stands

Despite requests from banks for a longer deadline, RBI has kept one strict rule intact:

• Money received in collection accounts must move to the main account within two working days.

Why this matters:

UAE-based Indians managing remote operations can access funds faster, making cash flow more predictable even from abroad.

Clear Rules When a Bank Becomes Ineligible

Account disruptions cause major problems for businesses operating from overseas. The RBI has now made this process transparent:

• Banks must inform customers within one month of losing eligibility.
• Customers get two months to close or convert those accounts.

The RBI also clarified that court or enforcement orders override RBI rules, ensuring legal clarity.

Monitoring Will Stay Strict

Banks had asked the RBI to relax surveillance on transaction accounts. The central bank refused.

Banks must continue to:

• Monitor accounts closely
• Prevent unofficial payment channels
• Stop third-party transactions

Expect this:

Some extra checks, but stronger security against misuse.

No Exemptions for Any Sector

Many institutions asked for special exemptions. RBI denied all such requests, insisting the framework is already simple and principle-based.

What UAE NRIs Can Expect Going Forward

The overall impact is largely positive:

• More flexibility in choosing which bank can operate key accounts
• Smoother working capital flow for businesses in India
• Faster access to payments due to the strict two-day rule
• Predictable banking processes with clear communication norms
• Cleaner, more transparent operations under stricter monitoring